1. Field of the Invention
The invention relates to the field of information processing. More specifically this invention relates to the field of automated electronic securities transactions.
2. Background Information
Traditionally, when wishing to perform securities transactions, a client would contact a broker at the firm with which the client was a member. This broker would act as an agent for the client in facilitating the execution of the trade on the appropriate exchange. The broker, in turn, would be in contact with another agent of the firm that performs the actual trades for the security of interest. For example, in the New York Stock Exchange (NYSE), the agent on the floor is termed the “floor broker”. The floor broker will interact with a “stock specialist” for a given stock on the floor of the NYSE. The “stock specialist” is responsible for the ordered trading of that stock. Thus, an interested client would need to communicate the desire to purchase stocks to his/her broker, the broker would need to communicate this, through internal channels in the firm, to the floor broker. The floor broker would, in turn, interact with the specialist to execute the stock trade.
While this traditional model of trading securities is still available, as a result of a number of factors, today's users communicate electronically with the market makers. Thus, today's users interested in trading stocks have the ability to communicate orders directly with the persons responsible for trading of stocks, thus eliminating delays associated with having to go through a “middle man”. This electronic trading directly with traders, such as a trading specialist on the NYSE, enables, among other things, the ability of day traders to make money on the swings of the market. The SuperDOT system is an order routing system that allows member firms of the NYSE to transmit orders directly to the “specialist” on the floor. While most individual traders do not have direct access to the SuperDOT system, many brokerage houses have provided “SuperDOT-like” interfaces that allow clients (users) to submit to the brokerage house an order resembling a SuperDOT order. The brokerage house then translates this order to a SuperDOT order for submission to the “specialist”.
The NASDAQ also provides the ability for users to trade directly with the market makers. Level II trading information is supplied to users to allow for intelligent decisions. Level II data provides more detailed information about what is currently being bid and asked for securities on the NASDAQ exchange. The users can then use that information to submit requests via Electronic Communications Networks (ECNs) to have their order filled directly by a market maker. Similarly, the user may submit orders via the Small Order Execution System (SOES). Both of these are systems that allow users to have rapid trade times for their orders with various market makers of the NASDAQ market.
Other systems for enabling the real time electronic trading of stock exists on these and other securities exchange systems. Moreover, new systems such as Direct+ and Anonymous SuperDOT are being considered to enable, among other things, a wider variety of entities to communicate directly with trading specialist. Where possible, it is desirable to identify and exploit this expanded, direct real time trading of stocks.